Wellness Programs: Agencies Issue Helpful Guidance but Look Before You Leap

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Recent studies indicate that wellness programs significantly improve the health of workers.  If only it were so easy to implement a wellness program . . .

As explained in our July 17, 2013 Benefits Update – Final Wellness Rules May Require Review of Existing Wellness Programs, final HIPAA wellness regulations were issued by the Departments of Treasury, Labor, and Health and Human Services (the “Departments”) on June 3, 2013 and apply to employer-sponsored group health plans for plan years beginning on or after January 1, 2014.  Wellness programs that are part of a group health plan must comply with the HIPAA wellness regulations, but additionally must comply with other provisions of state or federal law including, but not limited to the ADA, Title VII of the Civil Rights Act, and GINA.

The ADA requires employers to provide accommodations to enable individuals with disabilities to have equal access to fringe benefits offered to other individuals.  It also restricts employers from obtaining medical information from employees by generally prohibiting them from making disability-related inquiries or requiring medical examinations.  An exception permits employers to require employees to undergo medical examinations in limited situations, such as when they are “voluntary” and part of an employee health program.

Many employers have been slow to implement wellness programs because the EEOC had only ever stated that “[a] wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate.”  The EEOC had not addressed the extent to which incentives might affect the voluntary nature of a wellness program.  To compound the problem, the EEOC has been filing lawsuits challenging various employer wellness programs.

Responding to criticism, the EEOC issued a proposed regulation on April 16, 2015 providing guidance on what an employee health program is, what it means for an employee health program to be voluntary, what incentives employers may offer as part of a voluntary employee health program, and what requirements apply concerning notice and confidentiality of medical information obtained as part of voluntary employee health program.  The rules appear, for the most part, to align the ADA regulations with the HIPAA wellness regulations, although there are some exceptions.  For example, the EEOC rule differs from the HIPAA wellness rule in that it extends the 30% limit on incentives under health-contingent wellness programs to participatory wellness programs, while the HIPAA rule places no limits on incentives for participatory wellness programs.  In addition, the rules differ in that under the EEOC rules, a biometric screening or other medical examination that tests for the presence of nicotine or tobacco is a medical examination subject to the 30% limit on incentives rather than the 50% limit on incentives permitted under the HIPAA wellness regulations for programs permitted to prevent or reduce tobacco use.

On April 16, 2015, the EEOC issued the following interpretive guidance accompanying the proposed regulations:

•  EEOC Issues Proposed Rule on Application of the ADA to Employer Wellness Programs

•  Questions and Answers about EEOC’s Notice of Proposed Rulemaking on Employer Wellness Programs

•  Fact Sheet for Small Business: The EEOC’s Notice of Proposed Rulemaking on the Americans with Disabilities Act and Employee Wellness Programs

Also on April 16, the Departments issued FAQS ABOUT AFFORDABLE CARE ACT IMPLEMENTATION (PART XXV) addressing other aspects of the standards employer wellness programs must meet.  HHS has also posted HIPAA Privacy and Security and Workplace Wellness Programs indicating how the HIPAA privacy rules apply to workplace wellness programs.

The reconciliation of the ADA rules with the HIPAA wellness regulations, and the other clarifying guidance, may make employers more comfortable adopting workplace wellness programs.  However, in doing so, employers may wish to keep in mind the various other that rules that come into play such as ERISA, the taxation of wellness benefits, the affordability of premiums under Code Section 4980H, health savings account eligibility, and W-2 reporting of health coverage to name a few.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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